Reputation, corporate social responsibility and market regulation

The paper investigates the role of the government and self-regulatory reputation mechanisms to internalise externalities of market operation. If it pays off for companies to invest in a good reputation by an active policy of corporate social responsibility (CSR), external effects of the market will be (partly) internalised by the market itself. The strength of the reputation mechanism depends on the functioning of non governmental organisations (NGOs), the transparency of the company, the time horizon of the company, and on the behaviour of employees, consumers and investors. On the basis of an extensive study of the empirical literature on these topics, we conclude that in general the working of the reputation mechanism is rather weak. Especially the transparency of companies is a bottleneck. If the government would force companies to be more transparent, it could initiate a self-enforcing spiral that would improve the working of the reputation mechanism. We also argue that the working of the reputation mechanism will be weaker for smaller companies and for both highly competitive and monopolistic markets. We therefore conclude that government regulation is still necessary, especially for small companies.Corporate social responsibility; market regulation

Benchmarking of corporate social responsibility: Methodological problems and robustness

This paper investigates the possibilities and problems of benchmarking Corporate Social Responsibility (CSR). After a methodological analysis of the advantages and problems of benchmarking, we develop a benchmark method that includes economic, social and environmental aspects as well as national and international aspects of CSR. The overall benchmark is based on a weighted average of these aspects. The weights are based on the opinions of companies and NGO’s. Using different methods of weighting, we find that the outcome of the benchmark is rather robust for a sample of more than 50 large Dutch companies.Benchmarking; corporate social responsibility; sensitivity analysis; stakeholder perspective; transparency; triple P bottom line

Rhetoric and realities of corporate social responsibility

Corporate social responsibility (CSR) is often considered as an alternative for direct government regulation to internalize externalities on markets. Especially in a complex economically liberated and globalized world order, in which direct government regulation and centrally creating new markets for missing ones can be rather costly, social welfare might be enhanced when powerful market participants like companies choose to internalize externalities voluntarily by improving their corporate social performance (CSP). But is doing CSR really feasible for companies and can CSR indeed contribute to social welfare or is it just a rhetoric exercise of companies to maximize their own welfare on behalf of the social welfare? This dissertation studies these questions by (i) examining which and how economic, institutional and factors internal to the company affect the level of CSP and (ii) whether and how the rhetoric of CSR generates concrete impacts and therefore indeed contributes to social welfare

A scheme with two large extra dimensions confronted with neutrino physics

We investigate a particle physics model in a six-dimensional spacetime, where two extra dimensions form a torus. Particles with Standard Model charges are confined by interactions with a scalar field to four four-dimensional branes, two vortices accommodating ordinary type fermions and two antivortices accommodating mirror fermions. We investigate the phenomenological implications of this multibrane structure by confronting the model with neutrino physics data.Comment: LATEX, 24 pages, 9 figures, minor changes in the tex

Competition, Time Horizon and Corporate Social Performance

Abstract: This paper develops and tests a conceptual framework on the relationships between competition, time horizon and corporate social performance (CSP). We hypothesize that more intense competition discourages CSP by lowering the time horizon of companies. We test the hypothesis on a sample of 4696 of mainly small and medium-sized companies from twelve European countries. We distinguish between price competition, market position and technological competition. We find that companies with a longer time horizon have a higher CSP and that price competition and a ‘level playing field’ market position shorten the time horizon. The intensity of technological competition has a positive effect on time horizon, but also exerts a direct positive influence on CSP. Test results show that time horizon significantly mediates the influence of price competition, the market position and technological competition on CSP. The analysis implies that, from the perspective of CSP, the economic policy of the government should not focus on fostering price competition, but rather on strengthening competition in innovation.

Enumerating the k closest pairs mechanically

Let $S$ be a set of $n$ points in $D$-dimensional space, where $D$ is a constant, and let $k$ be an integer between $1$ and $n \choose 2$. An algorithm is given that computes the $k$ closest pairs in the set $S$ in $O(n \log n + k)$ time, using $O(n+k)$ space. The algorithm fits in the algebraic decision tree model and is, therefore, optimal

Pricing of convertible bonds with hard call features

This paper discusses the development of a valuation model for convertible bonds with hard call features. We define a hard call feature as the possibility for the issuer to redeem a convertible bond before maturity by paying the call price to the bondholder. We use the binomial approach to model convertible bonds with hard call features. By distinguishing between an equity and a debt component we incorporate credit risk of the issuer. The modelling framework takes (discrete) dividends that are paid during the lifetime of the convertible bond, into account. We show that incorporation of the entire zero-coupon yield curve is straightforward. The performance of the binomial model is examined by calculating theoretical values of four convertible bonds. The measure used to compare theoretical values with is the average quote, equal to the average of bid and ask quotes provided by several financial institutions. We conclude that in general long historical volatilities and implied volatilities tend to give the best results. Moreover, we find that our model follows market movements very well. The impact of different dividend and interest rate scenarios is rather small.